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Tuesday, July 21, 2009

$SPX Inverse Head & Shoulders Pattern Still the One to Watch

Today's action was quite bullish, with an orderly pullback off an early test of the June high helping the market to consolidate recent gains before running back up to close at the highs of the session and right at key resistance. The longer-term inverse head & shoulders pattern on the $SPX will be very important to monitor near-term, and should have a lot to say about which way this market is headed next. A convincing conquest of the neckline would suggest considerable upside potential, with a projected resolution of the pattern occurring at 1,229 -- which also happens to coincide closely with the 61.8% fibonacci retracement of the entire drop from the 2007 high to the 2009 low. That said, the pattern is still at risk of failure until confirmed, with formidable resistance at and just above the neckline, where a long-term trendline also comes into play and could be tough to overcome. So far, the bullish bias remains very much intact, but keep an eye on that pattern.

1 Comments:

moo said...

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